My BUYER is GREAT but their Northern Virginia Condo FAILED !!!!
As an agent who sells a number of condos in Northern Virginia I have seen more than once what happens when the builiding "fails" for FHA or VA funding.
Asking the right questions up front from not only the owner but the professional management company responsible for the condo building can save a lot of time and effort. Two of the biggest reasons in Northern Virginia that cause trouble are the owner to investor ratio and low capital reserves.
Save a buyer a huge disappointment by checking the numbers first.
In a perfect world, every seller and or realtor would love to have a very good buyer that is pre-qualified properly when placing an offer on their property. But what about the property itself? Let's dig into this a little deeper.
When I pre-qualify a borrower, I ask at least 10 to 12 important questions which usually covers all of the basics. How should a realtor treat a seller when selling their home? Do they just ask them a few basic questions and maybe pull up the tax records? Isn't there a phrase used by some that buyers are liars? Okay, maybe not lying, but what about withholding information or misleading? Can't sellers do the same? I think so and I think it's the job of the listing agent to pre-qualify their seller a little more in-depth than what might be on the surface.
Now, I am not a realtor, so I don't know exactly what the protocol is and what questions are answered. Or what kind of research goes into the property when listing the property. But I can say this from experience, in some cases I don't think the correct questions are being asked.
List of Questions
As mentioned, there are a set of questions that I ask every borrower when I pre-qualify them. These questions generally cover all possible issues that could take place during the buying process, hence why I ask these questions upfront.
Just recently I had a few buyers run into problems when trying to purchase a new home, but that these issues didn't appear until later on in the process. Examples :
1. The buyer was buying a twin which was also a PUD. (planned unit development) At one time, the seller converted the twin into a condo, which there are now 2 units. They actually got a lawyer involved and had a master deed drawn up. So now you actually have a property that is a PUD/condo. This type of property is rare and is more seen along some shorelines for a specific reason.
Solution : As a listing agent, maybe have in their set of questions asking if they had ever legally changed or converted the property into another type of property. If you searched the tax records, it was listed as a PUD and the appraiser stated that it was a PUD. We didn't find out about the condo issue until title came back. Now you have a potential issue and not to get into details, it killed this specific deal at the end because we need to approve the condo as a FHA loan, even though they were usuing USDA financing.
2. Illegal rooms or additions - This has happened more so in Florida because of the hurricanes. But I have seen this even in North Jersey to where a single family was converted into a duplex illegally. I have had a few deals in Florida to where the porch was converted into another room. Yet there were never any permits executed for this function or an inspection done after the fact.
Solution : Maybe a realtor should always ask if any rooms have been added on or converted after they bought the property and if so, was it done properly and through the correct channels. Or for the fact that if they are selling a multi-family home, that it was done legally.
Summary : Overall, I just think many of us need to be proactive and not just dwell on the buyer. I think specific questions should be asked on every property, no matter what you think or assume, or what you have found in your research from the tax records. Especially making sure that conodos are approved for specific types of financing. What have you seen out there or happen? As a realtor, what kind of questions do you ask?
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Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc
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